Good morning Mr. President: Uncle Sam is dead broke and there isn’t a darn thing you can do about it

Few Americans – that is apart from the inner core of carrion feeders and general scavengers on Wall Street – presently realize that America is not only flat broke but rapidly slipping behind Public Enemy Number One, namely, China. Moreover, the Federal Reserve is probably working towards the larceny of foreign gold deposits. Only a late-stage empire on the edge of implosion would get up to that kind of fix.

It is all very simple. The wonderful cure-all called globalism was supposed to cement the role of the United States as Global Number One in perpetuity. Instead, things have gone in another direction altogether.

The brash E and D – ‘emerging and developing’ – crowd have not only come up fast on the inside track – while hardly anyone in the United States can turn out a decent home-made pair of pants these days – their record levels of growth are fast replacing the dollar as the senior reserve currency.

Here’s an interesting stat: the E and D Bloc now accounts for roughly two thirds of all foreign exchange reserves now held in the leading central banks. Like the famous parable of the builder and the barrel, the dollar plunging earthwards has just passed the dynamic new tigers on the way up.

The US – like the EU – is a dying Old World economy. All the fizz is concentrated in South East Asia, which is increasingly known as the RNB Zone – the realm of the Chinese renminbi, the dreaded devil currency lambasted by the political establishment in Washington. Contrary to all the economic illiteracy circulating in the US, the Chinese have no need whatsoever to ‘manipulate’ the RNB against the dollar. Natural organic economic forces are doing the job perfectly well.

Not all the eggs, by any means, are in the Chinese basket, but wherever you care to look east of the Suez the dollar looks tired and dog-eared. Around the whole region bi-lateral trading pacts elbow aside the dollar as the currency of settlement for international trade, where the dollar previously reigned supreme.

The same phenomenon, naturally encouraged by ‘The Other Castro’ – Venezuela’s Hugo Chavez –is taking hold in Latin America. America’s brutal response has been to select certain countries with appealing tradable commodities like oil, of course, and then invade them.

Saddam Hussein’s threat to price oil in euros rather than dollars was the cause of his fatal undoing. Libya suffered the fate of Carthage because Gadaffi, it seems, had similar ideas, so he quickly went the way of all flesh.

Power, Mao reputedly pronounced, ‘grew from the barrel of the gun.’ That’s the chief mantra of the Pentagon – and Washington – these days. It is a doomed imperial knee jerk reaction to the unstoppable collapse of the current world financial and political order. America’s foreign policy is the equivalent of looking down the gun sights of the military High Command, Wall Street’s private legionnaires.

In the first decade of this century, China, the chief pilot of the E and D swarm, almost doubled its share of global foreign currency reserves to something like two-thirds altogether. A ‘reserve’ operates as a kind of savings bank. Foreign central banks deposit money in the form of US treasury notes to earn interest. The US Federal Reserve uses its stocks of holdings to service (not pay, please note) America’s outstanding obligations to other central banks around the globe. It’s a money-go-round that sooner or later would lose a wing nut first, then the wheel.

So long as dollar supremacy went unchallenged, the system by and large worked well. Then, not long into the new century, the rampant greed for profits and bonuses which infected the culture of every western bank ran amok. We are were in the new era of ‘credit derivatives’, invisible funny money, which the banks threw around like confetti, even though the new not-really-a-currency was the fiscal equivalent of the plague.

So Mr. President, it wasn’t the slow natural decline of an Old World economy such as yours, up against the brash new Chinese kid on the block, so much as it was a deliberate act of economic suicide performed by financial institutions whose obsession with profits drove them to invent a counterfeit currency which overtook – undermined would be a better word – the role of the dollar.

Of course, China and the RNB bloc running down their holdings of US dollars over the course of some twenty years didn’t help. But then, some prudent observer should have noticed that pace was quickening as the RNB people realized that something very sick had struck western banks, and any such sickness was bound to eventually poison dollar holdings.

I am always inclined to laugh when I hear pundits opine that the US economic crisis is over. It didn’t get started until 1995, picked up a real turn of speed by 2008 and by this year has eclipsed the collapse of the thirties. It is a co-incidence that the credit – or financial – derivatives/currency swap mania marched alongside the wholesale printing of money by the Fed, the European Central Bank and the Bank of England. The purpose of this insane enterprise was to mop up the estimated one thousand trillion dollars worth of imaginary, notional money sitting on the books of the main western financial institutions – and not a few behind what we used to call the Iron Curtain.

In terms of definition (a difficult task) these toxic instruments amount to little more than wishful thinking, based on some airy-fairy assessment of the alleged value of the said ‘derivative’ if priced on the open market. We are talking dud mortgages here, non-performing loans and so forth, not asset values that can be calculated in any precise form. It’s the equivalent of betting on flies climbing up the window, and indeed the markets made long-term calls that were not so dissimilar.

Now we turn to the printing presses which are churning out worthless paper money as though heaven were just around the corner.

Markets need inflation to gain value, so the ruling illiteracy states that you don’t actually need to stock up the balance sheet in terms of earnings through good old-fashioned manufacturing and services. The end result of course is currency devaluation, based on notional inflation.

So Mr. President, I hope that you now understand that the condition of the United States is already hopeless, unless the banks are restrained, forced to cleanse their vaults of completely useless artificial money and you employ your considerable authority to halt the printing presses. The Federal Reserve is gearing up to print unlimited quantities of dollars to purchase mortgage-backed securities and maintain nominal interest rates targeted at 0%. Not, please note, to help struggling homeowners, small firms and so forth afloat and definitely not to support investment, but simply to keep borrowing costs to a minimum among the banks who actually own the Reserve. That’s like inviting the burglars to Sunday lunch, Mr. President.

Of course, nervous central banks among the E and D Set elsewhere know exactly what is going on. That is why they are reducing their exposure to the dollar and the euro. Every time Ben Bernanke switches on the presses, the dollar gets another jolt. But these are not real dollars, they are digital dollars, passed around on computer spread sheets, a purely internalized currency which maintains the fiction that the banks are solvent when they are not.

‘Lookee here, this a great balance sheet, fit for the Gods.’ In fact these are the economics of a Black Hole. The trick allows the banks to write down their huge losses on dud – or non-existent – assets on the basis that there is a willing buyer just around the corner. There never is, except the Fed, of course.

It was the Financial Accounting Standards Board’s decision to suspend the famous belt and braces accounting rule 157 in the spring of 2009 that pointed the way to the madhouse. Of all the FASB’s tablets of stone, this is the most important, the equivalent of God hollering ‘Thou Shalt Not Worship False Money’ from the summit of Mount Washington. The words carved into the granite state that banks must by law value assets on their balance sheets at a credible exchangeable value.

As it is now, it is up to the banks to dab a wet finger in the air and decide what their losses are worth. Well, nothing, obviously, but that’s not the way banks are run any more. Write-offs? Write-downs? Forget it.

It will end badly and I would not be at all surprised if it happened on your watch. There’s certainly no sign of the 8th Cavalry coming to your rescue.

Now, Mr. President, we turn our attention to the mysterious case of the apparently disappearing gold. A number of observers are convinced that the US Treasury and perhaps the IMF have been selling gold in order to squeeze the price of the precious metal. It does seem strange indeed that the IMF’s SDR (special drawing rights certificates) have lost value faster than a parachutist who forgot his chute.

SDR’s are supposedly pegged to the value of gold, so in itself that’s a benchmark as to how much gold there is lying around. What we see is an astonishing decline from $ 9.0 billion flagged up in 1999. Each SDR has the rated value of 1/35th of an ounce of pure gold. So reports of a huge drop in the stock value of SDR’s suggests, on the most pessimistic assessment, that the Treasury is missing about 220 million plus gold ounces.

Where did it all go? Did it suddenly melt? Yet at the same time, the gold stocks held by the Treasury and the IMF have allegedly remained unchanged. Someone is telling porky-pies here. Either the status of gold stocks is not officially audited, or a lot of gold has indeed been sold off. To whom? Not, logically, to other central banks, because the Fed traditionally holds large stocks of other countries’ gold (hostage money, as sometimes claimed).

So the only possible exit would be to the hands of private goldbugs, which logically will be found among the ranks of the One Percent global elite. Many well qualified commentators are convinced that stocks are not only falsely accounted but the Federal Reserve may have been selling gold deposits rightfully belonging to foreign owners. Or, re-auditing foreign gold to replace Treasury holdings which have been sold off.

Certainly the German Bundesbank is refusing to answer direct questions from parliamentarians concerning the status of German gold holdings in the United States. Some MPs have rudely asked to see the gold, only to be brushed off. But the fact remains that without false accounting, how can the mysterious business of weight loss be explained?

It is plain that there are no adjustments to the balance sheet so some kind of fraud is the only possible option. Those who shy from this explanation are holding the Federal Reserve and the US government in a state of awe and reverence they do not deserve.

I might add to this by suggesting a kind of tread mill operation. The Fed is determined to hold down the price of gold to stop the dollar being over-valued. So is the extraordinarily fluid gold – using an alternative explanation – in a state of perpetual motion? Thus the Fed wriggles out of the charge of false accounting but remains open to manipulating price, in short, the exact practice which central banks are not supposed to indulge.

If 90% of US gold that seems to be either missing or not accounted for is still under lock and key, then why not open the books – and the doors? This is the only practical way to dispose of the contention that the US gold pile has either been swapped or sold off.

So it follows thus: if the price of gold is artificially depressed by rolling out the dollar mattress, then the upcoming bounce would be a big one, big enough to wreck the existing global payments system. Here we come to the billion-dollar question. Would the US really engineer the takedown of the dollar, a sort of fiscal 9/11, if the circumstances demanded it? Answer: if lining up a massive hedge position, then probably yes. That hedge position is represented principally by gold.

The politics involved are all-important and not sufficiently discussed in my opinion.

The US is currently attempting a repeat of the old Cold War strategy deployed against Russia to contain China, with a notable absence of success. We are back to military bluster and posturing, exaggerating the Chinese military threat, banging endlessly on the dud ‘currency manipulation’ drum, while continuing to export US jobs to China and Asia in general. As a credible strategy, it is banal.

The Renminbi Zone – if not all embracing, at least as yet – has left the US floundering for some kind of practical response. Such as good old engagement, for instance. Yet one imperial consul after another turns up in Beijing to command obedience while issuing instructions and orders. It is no exaggeration to say that the American administration is woefully deficient of any deep appreciation of the Chinese mind.

America’s policy of armed economics is not entirely responsible for the galactic budget imbalance, but – as John Maynard Keynes warned – the permanence of a warrior state is not supportable in the long term, and the term has already gone on far too long. America needs to prepare for a world in which she is a player, not the player.

The Gold Rush that I just discussed – coupled with the terminal sickness of the Western banking system rooted in false accounting and blatantly criminal practices – is another symbol of the approaching massive fiscal and economic wind-down.

In practical terms there is no way of ‘saving’ the dollar any more than the silly antics now being performed in Europe will ‘save’ the euro – or, for that matter, the famous US imperial appendage, the EU itself.

Global disorder is inevitable due to an incoming perfect storm of incompatibles: the impossibility and fiction of eternal economic growth, the collapse of the dollar as the leading global reserve, and with it, the euro, and the inability of the United States to re-float its economy having – to the eyes of the world – quite patently gone bust. The United States is already and firmly an empire in dissolution. What happens next may be uncomfortable, to say the least.

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Edited by End the Lie

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Uncle Sam has no use for money when all of us are risking out lives for weightless credit that God forbids. De.25:13-15 What he needs
is many in the IRS (Imaginary Revenue Scam) working for credit to
regulate the use of credit by all of us to keep the scam concealed.
Keynes told us that.

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